The deal to takeover Bear Stearns gets more complex as JPMorgan Chase is in talks to raise its share price offer, and the Fed is no too pleased.

NEW YORK (Reuters)
- JPMorgan Chase & Co is in talks to raise its takeover offer for
Bear Stearns Cos to about $10 a share in an effort to appease Bear
shareholders angry with the cut-rate deal, a person briefed on the
discussions said on Monday.

But the talks to increase the bid may still fall apart, and the timing of any announcement is uncertain, the source said.

JPMorgan's original agreement on March 16 to pay $2 per share in
stock for Bear was widely considered a fire-sale price for the
85-year-old Wall Street investment bank. Bear collapsed as large
subprime mortgage losses and falling confidence in the company prompted
a run on the bank.

In pre-market electronic trading, Bear shares were up more than 50
percent at $9.15 with 50,500 shares changing hands. The stock closed
Thursday at $5.96 in composite trading.

The original Bear takeover agreement was forged with the support of
federal regulators, and the U.S. Federal Reserve is balking at the
higher price, The New York Times said, citing people involved in the
talks.

The newspaper said the Fed originally directed JPMorgan to pay no
more than $2 per share to assure that it would not appear that Bear
shareholders were being rescued.

Representatives of Bear and the Fed were not immediately available for comment. JPMorgan declined to comment.

An offer of $10 per share would value Bear at more than $1 billion.
That price, however, is less than one-third of the stock's price on
March 14, the last trading day before the original deal was announced.
It is also less than 10 percent of the stock's price throughout much of
2007.

Jamie Dimon, JPMorgan's chief executive, grew convinced the merger
was in jeopardy after spending much of the last week taking calls from
indignant Bear shareholders, The New York Times said, citing people
involved in the talks.

Among these shareholders was the British entrepreneur Joseph Lewis,
who spent well over $1 billion on some 12.1 million Bear shares,
including some as recently as March 13.

Last week, Lewis said he would take whatever action was needed to
protect his investment, and might encourage Bear and third parties to
pursue other transactions.

Bear shares closed on Thursday at $6.39, reflecting investor
expectations that JPMorgan might raise its bid or that another suitor
might offer a higher price. JPMorgan shares closed at $45.97.

SEEKING SHAREHOLDERS

According to The New York Times, Bear was seeking to authorize the
sale of a 39.5 percent stake to JPMorgan on Sunday night, which under
Delaware law it can do without shareholder approval. Both companies are
incorporated in Delaware.

As part of the original agreement, the Fed extended a $30 billion
credit line to JPMorgan to finance Bear's most illiquid assets.

JPMorgan was in talks with the Fed Sunday night to assume the first
$1 billion of losses on Bear assets before the $30 billion cushion
kicks in, the newspaper said.

The original agreement called for JPMorgan to swap 0.05473 of its shares for each Bear share.

(Reporting by Chris Reiter, Joe Giannone and Jonathan Stempel,
additional reporting by Anshuman Daga in Singapore; Editing by Jean
Yoon and John Wallace)